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Construction output drops in November

CONSTRUCTION output fell in November fuelling fears the UK economy may contract again.

The Markit/CIPS Construction Purchasing Managers' Index (PMI) dropped to 49.3, from 50.9 in October, and below 50 which signals growth.

New orders fell at their steepest rate in more than three years, prompting confidence to fall to its lowest level since 2008.

That resulted in jobs being cut at the fastest pace in almost two years.

Economists are warning the industry has yet to hit "rock bottom" and believe the Chancellor must provide stimulus in today's autumn statement.

Tim Moore, from survey author Markit, said: "A protracted decline in workloads, the double-dip UK recession and shrinking investment spending has made 2012 a year to forget for the construction sector.

"November's PMI survey suggests that construction output has yet to hit rock bottom. This was highlighted by new work dropping at the fastest pace for around three-and-a-half years, while signs of a greater squeeze on client's budgets for 2013 brought confidence to its weakest since the record lows of late-2008."

Howard Archer, chief UK & European economist at IHS Global Insight, said: "With the construction sector seemingly headed for further contraction and with the manufacturing sector still struggling despite showing some signs of limited improvement in November, the economy is going to be reliant on clear expansion in the dominant services sector if it is to avoid a renewed GDP dip in the fourth quarter after the third quarter rebound.

"Meanwhile, the November construction purchasing managers' survey intensifies the case for strong government initiatives to try to lift infrastructure activity and house-building.

"There is significant pressure on the Chancellor to find more money and support for infrastructure investment and projects in his autumn statement."

The PMI signalled input price inflation eased slightly in November from the 10-month high in October. The purchasing costs high is thought to be linked to rising fuel and energy cost.

Residential building dipped for the sixth month in a row while the drop in commercial construction was the steepest in almost three years. Civil engineering activity increased at the quickest pace in seven months.

David Noble, chief executive at the Chartered Institute of Purchasing & Supply, said: "House building continues to witness falling levels of activity and the commercial sector, the shining light of construction earlier this year, is contracting at the fastest pace since late-2009. Civil engineering continues to be the one slither of growth in the sector.

"To add insult to injury, input price inflation eased only marginally from the 10-month high in October, courtesy of high fuel and energy costs, leaving the sector in a difficult place as it searches for relief ahead of 2013."

Contextual targeting label: 
home improvement

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